Michael Perelman
Sat, 30 Mar 2002 18:04:49 -0800
hot off the keyboard!! I recently worked about 6 weeks on a complicated & comprehensive paper entitled Fractional Reserve Banking as Economic Parasitism: A Scientific, Mathematical and Historical Expose, Critique, and Manifesto download it in PDF from the economics papers archive: http://econwpa.wustl.edu/eprints/mac/papers/0203/0203005.abs would be interested in any feedback. due to the contents, am also attempting to maximize its exposure, please help me spread the word. abstract -- This paper looks at the history of money and its modern form from a scientific and mathematical point of view. The approach here is to emphasize simplicity. A straightforward model and algebraic formula for a large economy analogous to the ideal gas law of thermodynamics is proposed. It may be something like a new ``F=ma'' rule of the emerging econophysics field. Some implications of the equation are outlined, derived, and proved. The phenomena of counterfeiting, inflation and deflation are analyzed for interrelations. Analogies of the economy to an ecosystem or energy system are advanced. The fundamental legitimacy of ``expansion of the money supply'' in particular is re-examined and challenged. From the hypotheses a major (admittedly radical) conclusion is that the modern international ``fractional reserve banking system'' is actually equivalent to ``legalized economic parasitism by private bankers.'' This is the case because, contrary to conventional wisdom, the proceeds of inflation are not actually spendable by the state. Also possible are forms of ``economic warfare'' based on the principles. Alternative systems are proposed to remediate this catastrophic flaw. additional information: -- - I draw key analogies to (a) capitalism as a religion, (b) invisible slavery, (c) parasitism, and (d) economic warfare (e) a short electronics analogy the parasitism metaphor is examined in most detail due to its apparent high fidelity. - analogies of money issuance to company stock. - there's a scathing critique of keynes & keynesianism as a ideology of economic parasitism. - a large section on greenspan and the gold standard. - I tackle the issue of growth in the economy, and relationship to interest rates. - I define "scarcity integrity" of a banking system with features of "fairness" and "soundness". - there is significant commentary on the federal reserve and by implication, international central banking systems. - I look significantly at US banking history and historical personages such as jefferson. - I challenge the conventional terminology of "deflation, price stability, fighting inflation, growth, market rates". - I examine luddism & how technology can actually exacerbate slavery. "state-of-the-art 21st century sweatshops" - re: parasitism, I look at very current research into parasites that can cause sinister behavioral changes in the host & draw the analogies. - free press as an immune system is examined. - mcmurtry's "cancer stage of capitalism"-- rampant, parasitical growth - "silent weapons for quiet wars" paper considered seriously. - "host psychological complicity"-- negative/pathological psychological qualities of the masses that allow parasitism to flourish - virulence, how deadly is the parasite? also, what is the meaning of growth relative to a parasite infection? - national or international economic warfare via failed or corrupt banks - examination of pattern of economic warfare in IMF and World Bank policies, accusations of joseph stiglitz - mcfadden's, traficant's charges against the federal reserve bank - possible alternative systems & key themes to focus on for money reformists - proposal of many new research directions to pursue section summaries -- introduction - analogies to econophysics, popular literature, complexity, computational revolution implication on economics, economics as biology, economics as energy system brief history of money - fiat, receipt, fractional money defined. counterfeiting, publicly-owned, privately-owned money expansion. straight vs expansion borrowing. money manipulation vs supply & demand. mathematical analysis - thermodynamics perfect gas law as bridge theorem, stock market, counterfeiting vs seigniorage, money energy extraction via money manipulation, velocity of money, temperature changes, growth, interest, deflation as a natural, emergent distribution of economic gains, optimal money expansion policy, higher verisimilitude models, electronics analogy, "blip corruption", scarcity integrity, fairness, soundness defined, money vs credit, blips used against nations religion of capitalism - capitalism as taking irrational aspects of religion. orwellian doublespeak & false terminology and blind dogma. "voodoo economics". terms challenged: "money supply, deflation, fighting inflation, free market, lassiz fair, growth, market rates" economic slavery - use of economic system for highly sophisticated, invisible slavery system. "21st century sweatshops". luddite movement re-examined. technology as a means for making slavery more efficient. economic parasitism - parasite analogy developed in detail from latest research into parasitism. central importance of the bloodstream. leeches, bloodletting, destruction or deception of the host's immune system. "baitswitching and frogboiling". cancer metaphor. "zombiefication". IMF/world bank policies as corrupted by parasitism. keynesianism as bogus. red-queen dilemmas that accelerate rat-race conditions, host stress & activity due to parasite influence. virulence considered, could parasite be beneficial? importance of parasitism in real ecosystem, possibly as regulatory mechanism. "host psychological complicity", negative psychological qualities of populace conducive to parasitism. economic warfare - silent weapons for quiet wars, use of bank failures and bailouts for parasite advancement & immune system sacrifices. phenomenon of money leverage at local or global level. invisible seizure & invasion of economic territory via the banking and money system. stiglitz accusation of money parasitism within IMF and World Bank. use of secrecy as a parasite mechanism. accusations by mcfadden and traficant on international banker conspiracy, treason. 21st century blip system - some possibilities of a parasite-free system. problem of free market solution relative to bailouts. full reserves. digital currencies. fixed count blip system. problem of money laundering as "parasitism enforcement mechanism". uselessness of street demonstrations. "leverage polarity" of economics vs politics and how to identify it and transcend it. "monergy" system, new form of energy considered. further research - better models, like global warming, improved econophysics research, fit the parameters, study it in terms of science/math/energy, fairness and soundness, localized testbest & experimental laboratories, CPI and other indicator skews or bias. frequently asked questions - a frivolous, facetious, satirical section but that serves as a brief introduction to the material and some key themes. comedic relief. growth, inflation, gold, is there really a conspiracy? "witchhunts, mccarthyism". admitted weaknesses of the paper. comments on references - info to other researchers looking to follow up on the material, a little road map. key references & brief comments. strengths and weaknesses of the references used for this paper. survey of especially the more definitive and comprehensive references. stuff to add -- one could spend a whole lifetime on this subject, and many have. but my goal is only partly research, another key goal is publicity & activism. you can return the favor by helping publicize/spread the paper. I didnt go into the biddle-jackson historical confrontation much, but its a good or possibly best archetype for seeing how economics & political power are interrelated. biddle led a team of bankers who created a depression via money manipulation as a way of controlling the masses and hopefully manipulating a political election. it was a clearcut case of a econo-politico conspiracy insinuated by the paper, where the "money parasite" apparently failed by a narrow miss, but arguably it was just a learning opportunity for later operations.... also I have a section on the mathematics of gresham's law. there is a slight bit of mathematics to add to show that individuals gain or lose wealth in the parasitical bank system based on their current wealth. in other words, there is a specific threshhold parameter, a critical point, in which those with wealth above it have "up leverage", i.e. their wealth increases without action, and those below it have "down leverage" (so to speak), i.e. their wealth decreases without action. a gifted reader can easily derive these results. that is, the modern banking system has a fundamentally regressive "taxation" system built masquerading in the interest rate structure. "taxation" is a misleading term because this is just a wealth transfer from the poor to the rich, without any government services involved! the paper does not play up the poor vs rich polarity very much, but its obviously highly implicit in the entire work. I didnt get into this, but one decoy for a parasite is to portray "bumbling bureacrats". for example the IMF & world bank might just take the cover of looking very foolish & not able to understand the implications of its policies. e.g. stiglitz seems to fall into this trap. as the saying goes, "never attribute to malice what can adequately be described by stupidity". but conversely, "if stupidity is not adequate to explain it, then the malice must be confronted and challenged if it is to be stopped!!" lots of juicy keywords for the search engines: -- fractional reserve banking money expansion parasitism capitalism greenspan gold thermodynamics perfect gas econophysics gresham's law stiglitz money supply inflation deflation growth price stability counterfeiting energy radical polemic revolution economic warfare religion doublespeak gdp scarcity fiat blips federal reserve history slavery lassaiz-fair solow keynes keynesianism cancer psychology sociology politics analogy IMF world bank GNP GDP digital cash money laundering pareto mcfadden echelon nsa free market conspiracy seigniorage bionomics parasite borrowing stock temperature interest rates electronics silent weapons quiet wars bloodstream credit wealth illegitimate corrupt corruption shareholder negligence integrity fair sound assets confidence faith fraud sham manipulation accounting accountability manage administration debt deficit government regulation revenue standard confiscation trust backing insidious iniquity humanity life conservation invisible folklore legend embezzlement savings international emergent distributed luddite sweatshop diabolical dangerous treacherous healthy prey predator predation predatory secret secrecy power powerful bankers freeliving evade defense delusion biology bloodstream dynamics circulation monetary reform hypothetical threatening immune system ecosystem media evolution productivity protective virulence infection infected siphon complicity exploitation riot dislocation crisis critical currency infiltration kickback bailout crime criminal treason invasion seizure -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]